Market Talk – February 16, 2021

Posted Feb 16, 2021 by Martin Armstrong |

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ASIA:

China’s textile and clothing manufacturing suffered losses last year as US consumers and businesses moved away from Chinese labor. The apparel market in the US dropped -23% in 2020, marking a ten-year low. Asian competitors such as Bangladesh, India, Vietnam, and Cambodia saw a 42% rise in this sector last year as suppliers look to move beyond China. The US still has restrictions placed on cotton products produced in the Xinjiang Uygur region due to the clothing allegedly being made with forced labor, causing cotton-related imports to the US to drop by nearly -40%.

A South Korean intelligence agency has reported that North Korean hackers have attempted to steal the formula for coronavirus vaccines. The hackers specifically targeted Pfizer, but some experts are stating the hackers were motivated by selling the data on the black market rather than using it to develop a vaccine for North Koreans. The “hermit kingdom” has not released data on its infection rates, but has ordered around 2 million Astra-Zeneca doses of vaccines through the COVAX sharing program.

The Confederation of Trade Unions is pushing to provide Hong Kong residents impacted by the pandemic with a second round of HK$10,000 stimulus checks. However, Hong Kong is currently facing a HK$300 billion deficit, causing some lawmakers to question the proposed spending. Earlier in the pandemic, the government provided over HK$310 billion in aid for both individuals and businesses affected by the virus, including a one-time stimulus check of HK$10,000 for residents underprivileged non-residents.

The major Asian stock markets had a mixed day today:

NIKKEI 225 increased 383.60 points or 1.28% to 30,467.75
Shanghai closed
Hang Seng increased 573.09 points or 1.90% to 30,746.66
ASX 200 increased 48.40 points or 0.70% to 6,917.30
Kospi increased 16.25 points or 0.52% to 3,163.25
SENSEX decreased 49.96 points or -0.10% to 52,104.17
Nifty50 decreased 1.25 points or -0.01% to 15,313.45

The major Asian currency markets had a mixed day today:

AUDUSD decreased 0.0034 or -0.44% to 0.77542
NZDUSD decreased 0.003 or -0.41% to 0.72053
USDJPY increased 0.55 or 0.52% to 105.94
USDCNY increased 0.02305 or 0.36% to 6.42872

Precious Metals:

Gold decreased 23.16 USD/t oz. or -1.27% to 1,795.35
Silver decreased 0.406 USD/t. oz or -1.47% to 27.184

Some economic news from last night:

Japan:

Tertiary Industry Activity Index (MoM) increased from -0.6% to -0.4%

South Korea：

Export Price Index (YoY) (Jan) increased from -4.7% to -2.3%

Import Price Index (YoY) (Jan) increased from -9.9% to -6.7%

Australia:

HIA New Home Sales (MoM) decreased from 91.8% to -69.4%

New Zealand:

External Migration & Visitors (Dec) decreased from -98.60% to -98.90%

Permanent/Long-Term Migration (Dec) decreased from 643 to 451

Some economic news from today:

New Zealand:

GlobalDairyTrade Price Index increased from 1.8% to 3.0%

EUROPE/EMEA:

German Economy Minister Peter Altmaier stated that the country should not reopen due to fears of a third wave of coronavirus cases. The current lockdown, extended until March 7, but salons may begin to open on March 1. Factories, offices, and grocery stores have remained open throughout the extended lockdown. Chancellor Merkel said she would like to see the German economy gradually reopen, aiming for an infection rate of under 35 new cases per 100,000 per week. The country is currently experiencing 59 cases per 100,000 people as of Tuesday.

Nearly 15.6 million Britains have received the coronavirus vaccine, marking the fastest large-scale vaccination program of any country thus far. The country purchased numerous vaccines from different manufacturers to avoid a shortage. Clive Dix, who leads the country’s vaccine rollout plan, believes that all adults in the UK could receive both doses of the coronavirus vaccine by August, September, “or sooner.” Dix aims to have over 100 million doses delivered in the near future and plans to issue the vaccines as quickly as possible.

The major Europe stock markets had a mixed day:

CAC 40 increased 0.28 points or 0.01% to 5,786.53
FTSE 100 decreased 7.25 points or -0.11% to 6,748.86
DAX 30 decreased 44.88 points or -0.32% to 14,064.60

The major Europe currency markets had a mixed day today:

EURUSD decreased 0.00216 or -0.18% to 1.21088
GBPUSD decreased 0.00066 or -0.05% to 1.39073
USDCHF increased 0.00229 or 0.26% to 0.89230

Some economic news from Europe today:

France:

French Unemployment Rate (Q4) decreased from 9.1% to 8.0%

Italy:

Italian Trade Balance (Dec) increased from 6.751% to 6.844B

Italian Trade Balance EU (Dec) decreased from 0.07B to -1.20B

Germany:

German ZEW Current Conditions (Feb) decreased from -66.4 to -67.2

German ZEW Economic Sentiment (Feb) increased from 61.8 to 71.2

Euro Zone:

Employment Change (YoY) increased from -2.3% to -2.0%

Employment Change (QoQ) decreased from 1.0% to 0.3%

Employment Overall (Q4) increased from 157,388.8K to 157,927.0K

GDP (QoQ) (Q4) increased from -0.7% to -0.6%

GDP (YoY) (Q4) increased from -5.1% to -5.0%

ZEW Economic Sentiment (Feb) increased from 58.3 to 69.6

US/AMERICAS:

The International Monetary Fund (IMF) anticipates the US economy advancing by 5.1% in 2021, followed by 2.5% growth in 2022. The global economy is expected to rise 5.5% overall in 2021, followed by 4.2% in 2022. An increase in vaccinations, curbing lockdowns, and economic stimulus will all contribute to the economy regaining strength.

Federal Reserve Governor Michelle Bowman stated that America has “a long way to go” before recovering from the pandemic. Bowman noted that new variants of the virus are troubling as it is unknown how the current vaccines will respond. “The prospect of widespread vaccination is definitely encouraging, but there is still a great deal of uncertainty and this is not the time for us to be complacent,” Bowman stated on Tuesday. Her concerns echo comments made by Chairman Jerome Powell last week who stated that high levels of unemployment, mixed with uncertainty about the course of the virus, provided incredible uncertainty for recovery.

Europe has overtaken US as China’s top trading partner. Exports to China from the European Union advanced 2.2% in 2020, while exports rose by 5.6%. In contrast, exports to America declined -8.2% and imports dropped -13.2%. Furthermore, the EU made a deal with China that allow new investment and businesses to operate in China with less red tape.

US Market Closings:

Dow advanced 64.35 points or 0.2% to 31,522.75
S&P 500 declined 2.24 points or -0.06% to 3,932.59
Nasdaq declined 47.97 points or -0.34% to 14,047.5
Russell 2000 declined 16.47 points or -0.72% to 2,272.89

Canada Market Closings:

TSX Composite advanced 32.29 points or 0.17% to 18,492.5
TSX 60 advanced 2.32 points or 0.21% to 1,097.46

Brazil Market Closing:

Bovespa advanced 128.89 points or 0.11% to 119,428.72

ENERGY:

The oil markets had a mixed day today:

Crude Oil increased 0.25 USD/BBL or 0.42% to 59.7200
Brent decreased 0.18 USD/BBL or -0.28% to 63.1200
Natural gas decreased 0.02 USD/MMBtu or -0.65% to 3.0440
Gasoline decreased 0.0226 USD/GAL or -1.27% to 1.7587
Heating oil decreased 0.0154 USD/GAL or -0.84% to 1.8078

Top commodity gainers: Wheat (2.00%), Coffee (3.01%), Sugar (1.40%) and Lean Hogs (16.66%)
Top commodity losers: Palm Oil (-4.90%), Coal (-1.89%), Silver (-1.47%), and Platinum (-1.94%)

The above data was collected around 12:46 EST on Tuesday.

BONDS:

Japan 0.08%(+1bp), US 2’s 0.12%(+0.010%), US 10’s 1.29%(+9bps); US 30’s 2.00%(+0.08%), Bunds -0.39% (+3bp), France -0.16% (-1bp), Italy 0.59% (+6bp), Turkey 12.61% (+0bp), Greece 0.77% (+0bp), Portugal 0.21% (+5bp); Spain 0.31% (+10bp) and UK Gilts 0.62% (+5bp).